Qualcomm StreamBoost and the Limitations of "Dumb Network"

From time to time, when network architects think about how to best design large IP networks, and what is the "best" way to do so, there can be a divergence of opinion about how much "intelligence" to build in, and where that intelligence should be located.

These days, there is some thinking intelligence should be at the edge, while others argue logically that it should be at the core of the network. 

Count Qualcomm as among those who believe lots can be done, and should be done, at the edge of the network. 

Qualcomm Atheros,"StreamBoost™" technology for Wi-Fi routers and gateways manages and shapes traffic, and giving each connected device and application the priority and bandwidth required for optimal performance.

Qualcomm also is introducing a companion cloud service that monitors application usage and can adapt the router based on actual usage, to prioritize any new apps as well. 

Service providers might once again find themselves frustrated by the new technology, in a sense, as once again within the Internet ecosystem, innovation and value are properties of devices or Internet apps, not the transport or access. 

How Long Before U.S. Smart Phones Reach 80% Penetration?

If current adoption rates continue for another year and a half, smart phone adoption in the U.S. market will reach 80 percent by about August 2014. 

Does Wi-Fi Compete with Mobile Access?

With all the talk now of “heterogeneous networks” integrating traditional mobile with Wi-Fi access, it is not hard to understand why many find irresistible the notion that Wi-Fi could become a substitute for mobile broadband. That refrain has been heard, off and on, for decades.

The issue seems to be arising anew because cable operators contemplate using Wi-Fi as their “wireless” strategy.  But most major mobile service providers think Wi-Fi complements mobile, especially by offloading traffic that does not need to use the “mobile” network because users are stationary.

According to Signals Research Group, mobile data traffic in the United States alone is forecast to grow between 53 and 153 times from 2010 to 2020, compared with projected growth in U.S. cellular capacity of only 25 times over the same period.

To meet this demand, mobile service providers are adding macro network capacity by increasing cell site density, investing in new cellular technology, such as long term evolution, or LTE and LTE Advanced,and acquiring additional spectrum, and also offloading traffic to Wi-Fi networks.

To be sure, cable operators hope their own public Wi-Fi networks will offer their customers an “untethered” out of home experience without offering full mobility services under their own brand names, at least for the moment.

But most of the mobile industry sees Wi-Fi as complementary to mobile networks, and not as a competitor.

“Tariffs have consequences,” researchers at the Yankee Group rightly note. And tariffs, and the shaping of retail offers, can have a powerful effect on user behavior, in ways that can shape consumption of data overall and moderate and shape capital investment.

The mobile operator’s business objectives are only sometimes and partly related to improving mobile coverage) at specific locations. An equally important objective, in some instances, is the ability to supply more bandwidth without loading the mobile network.

The former business objective (coverage) can be provided either using a small cell, dividing macro cells or offloading to Wi-Fi networks. The latter objective (offload) is better satisfied, where possible, by encouraging use of Wi-Fi.

Softbank in Japan has tested the offload potential of dense Wi-Fi deployments and apparently has concluded that less than 25 percent of mobile data traffic can be offloaded to public Wi-Fi in the long term.

Those estimates correspond with figures Boingo suggests. Boingo believes about 22 percent of mobile traffic will be offloaded to Wi-Fi by about 2016.

Others might disagree. Cisco analysts say as much as 30 percent of mobile traffic could occur on Wi-Fi networks. And analysts at Juniper Research think more than 60 percent of mobile device traffic could be offloaded to Wi-Fi means by about 2015.

Others say studies show as much as 70 percent of smart phone traffic uses a Wi-Fi connection.

The larger point, though, is that Wi-Fi still is not a “competitor” to “mobile” networks and service, even as cable operators plan to use their own public Wi-Fi networks.

What Comes Next After Mobile Data Peaks?

At least until 2016, mobile broadband will be the product  that offers the single highest revenue contribution to growth, analysts at Ovum say. The issue, you might well say, is “what comes after that?”

The reason is simply that replacing the primary “voice” revenue source is a big undertaking.

Mobile broadband will grow 19.2 percent annually and generate $122.9 billion in incremental revenue between 2013 and 2016. Ovum predicts. Over a four-year period, that suggests annual revenue of about $31 billion.

That’s a healthy figure, but in the context of a global business generating about $2 trillion a year, or about $20 billion a month, even mobile broadband represents about $2.6 billion a month. In other words, the "law of large numbers" is at work. 

Any new revenue sources that aim to replace existing key sources have to become "big" at some point. Many of the "new sources," such as public cloud, enterprise Ethernet, IPTV, and managed and hosted IP voice, will grow at double-digit rates, Ovum suggests. 

But ask yourself whether any of those sources currently represent even half a billion a month in revenues.
International Telecommunications Union figures illustrate the issue. In 2011, there were about 8.8 billion subscriptions in service, including fixed voice, fixed broadband, mobile voice and mobile broadband.

But fully 67 percent of those connections are mobile voice lines. Only about 12 percent of those subscriptions are for mobile broadband. In other words, it takes quite a lot of growth of mobile broadband to “move the needle” on total revenue.

Similarly, only about 13.5 percent of total connections are for fixed network voice, and only about seven percent of total lines are fixed broadband accounts.

By definition, big changes in revenue come from changes in those key revenue sources, especially what happens with mobile revenue. 

Global Subscriptions	(millions)
Fixed-telephone subscriptions	2009	2010	2011
Developed	555	548	539
Developing	694	680	665
World	1'249	1'227	1'204
Mobile-cellular subscriptions
Developed	1'384	1'413	1'514
Developing	3'263	3'898	4'457
World	4'647	5'311	5'972
Active mobile-broadband subscriptions
Developed	450	516	635
Developing	165	256	458
World	615	773	1'093
Fixed (wired)-broadband subscriptions
Developed	271	293	309
Developing	193	235	280
World	465	528	589

Mobile broadband has been leading revenue growth for mobile service providers for some time. But revenue is a "leaky bucket." In other words, new revenue is being earned, but legacy sources are dwindling at the same time.

In some markets, such as Western Europe, the shift of revenue sources is even more pressing.

The decline in European fixed telephony revenues is accelerating (-8.3 percent in 2011 and –31 percent over the last five years), driven in part by a negative five percent growth of fixed lines in service, according to the European Telecommunications Network Operators Association.

Since 2005, fixed line subscribers have declined 22 percent.  The bad news is that mobile revenues, long the driver of industry growth, also are declining (-0.6 percent)

Mobile voice revenues were down 4.7 percent in 2011 (–13.2 percent over the past three years), a decline driven by significant drops in some large countries: Spain (-8.3 percent), France (-8.2 percent) and Germany (-7.1 percent).

Fixed network broadband revenue is the bright spot, as revenues were up 6.5 percent in 2011.

Mobile services, though, remain the bulk of telco revenues, accounting for 52 percent of the total market (142.7 billion EUR in 2011).

But you might reasonably ask whether it is reasonable to expect many new lines of business to collectively approach the $123 billion in incremental revenue contributed by mobile data services between 2013 and 2016.

One way of illustrating the magnitude of new revenues required is to note that, globally, mobile service providers will lose about $1 billion a month in voice and messaging revenues in 2013, Yankee Group analysts predict.

Over a four-year span, assuming the rate of decline does not change, mobile service providers would lose about $48 billion in voice and messaging.

But mobile service provider data revenue will increase from $319 billion in 2011 to $550 billion by 2016, so total mobile service revenue will increase from $1 trillion in 2011 to $1.15 trillion by 2016, the Yankee Group estimates. 

Note the figures: total revenue grows $150 billion. But mobile data grows $231 billion. So other revenue is dwindling.
The global mobile voice and messaging market will decline from $758 billion in 2012 to $746 billion in 2013. That's only about $12 billion, so most of the loss is coming from somewhere else, with fixed network voice being the logical culprit in most developed markets.

In terms of growth, mobile remains key. On a global basis, telecom service provider revenues, topping $2 trillion in 2012,  were generated mostly by mobile services. Some 60 percent of total revenue was earned by mobile operators, Ovum  says.

Mobile Broadband Revenue Will Surpass Fixed Broadband Revenues in 2014

In 2014, telecommunications companies will make more money from mobile broadband than from fixed broadband for the first time, Ovum projects. 

Will LTE Help Fix "Dumb Pipe" Problem?

For industry observers or practitioners who dislike the notion that high speed access is an undifferentiated commodity, Long Term Evolution fourth generation networks might be one of the biggest marketplace changes to affect markets in 2013, not least of the reasons being that LTE sets the stage for a segmentation of the access market.

Observers will disagree about the potential impact of large telcos substituting LTE for fixed broadband, but such substitution could change local competitive dynamics.

Will customers readily adapt to high-bandwidth mobile networks as viable substitutes? And if so, what are the implications for all other competitors in those markets?

If you think about it, LTE now adds a mobile angle to the untethered way fixed networks have been used. Up to this point, 3G has been an unsatisfactory alternative to fixed network access, with the exception of the mobile use case. LTE 4G will change that, for many new scenarios.

The classic case, up to this point, has been the broadband market in Austria, where, sometime in 2010, mobile broadband passed fixed network broadband. Some might say that is not unusual, since the same thing is happening lots of other places as people adopt smart phones. That is true enough.

But it also is true that in Austria, consumers have been substituting mobile broadband for fixed broadband for their PC Internet access as well. To be sure, many will argue mobile broadband is complementary, not a substitute for fixed access.

According to Ofcom, about 19 percent of Austrian households are "mobile-only" for broadband. And if people will do that using slower 3G, one has to believe a greater percentage will do so if they have access to LTE and 4G.



Single-person, highly-mobile users who travel a lot, but don't watch much TV, are prime examples of consumers for whom LTE might emerge as the preferred choice.

On the other end of the scale, users who watch lots of Netflix or other video, support many devices and multiple users, will continue to find that a fixed connection with a large usage cap remains the best alternative, even when that connection is not as fast as some LTE connections.


Impressionistic reports from areas where LTE is available suggest speeds range from perhaps 3 Mbps to 6 Mbps on the low end and as high as 15 Mbps to 30 Mbps on the high end. For many users "speed" will be satisfactory. Price and usage caps will be the main issues.

In between will be lots of scenarios where other network alternatives make sense, based on the structure of retail plans, the size of usage caps and monthly pricing. 

Where available, cable high speed access might be the best choice for multi-user households that stream lots of video, and therefore need both speed and big caps. Price might not be as important as usage caps, for such customers. Speed generally might not be much of an issue at all.

Where cable is not available, fixed wireless might become more attractive, for many of the same reasons.

Users who want “speeds faster than my local DSL,” but using relatively low amounts of bandwidth, might turn to LTE.

Customers with low or moderate bandwidth consumption, and low to moderate speed requirements, might choose satellite or DSL.

Customers with moderate consumption, and moderate to high-speed requirements, might opt for fixed wireless, even where cable is available, for price reasons.

Mobile-only might become more attractive for smaller or single-person households able to use LTE networks and who already use smart phones. The incremental cost of a large LTE data plan, added to smart phone subscription, might make mobile-only a reasonable choice.

And there might be several options for users whose primary consideration is price, not speed or the size of usage caps.

There is no easy way to determine, everywhere, and for all classes of customers, how the competitive dynamics will shift over the next several years.

Some might legitimately argue that LTE will not be a reasonable substitute for fixed broadband services. And you might argue that retail packaging (price and usage caps) are the key issues, not “bandwidth.”

Ignoring price for the moment, consider that usage caps on mobile are two orders of magnitude lower than on fixed networks (5 Gbytes for mobile, 150 Gbytes to 250 Gbytes for a telco or cable modem service. That is hardly comparable, in one sense.

The issue is actual user behavior, though. Two orders of magnitude might not be an issue for some users. An order of magnitude less bandwidth won’t bother most users of fixed network broadband, one might argue.

The question is whether the service, and the retail packaging, can be adapted to fit the actual end user demands “most” potential buyers will have. It seems clear LTE will not be a viable choice for some users, especially those who watch lots of online video.

But “typical” users are a possibly different story. Single-user households are a different story. Nor should we automatically assume that today’s “mobile broadband” tariffs are the way future access tariffs are structured.

In other words, given a willingness on the part of LTE suppliers to create new “fixed” versions of LTE retail packages, quite a lot might be possible. FreedomPop, for example, has created both “fixed” and “mobile” versions of its wireless access service, using the Clearwire network. There is no reason in principle that such tariffs could not be created by LTE suppliers in rural areas.

That such tariffs have not yet been created does not mean they will not be created.

With some exceptions, the actual percentage of broadband users in developed markets who already use mobile broadband exclusively, in place of a fixed connection, is rather limited. A 2011 study by Ofcom, the United Kingdom communications regulator, suggests that single-digit percentages of users already are doing so, the exceptions being Italy and Austria.

In Austria, perhaps 19 percent of respondents to surveys say they are “mobile only,” while in Italy about 14 percent report using only mobile broadband. In Germany the percentage was about nine percent, while in the United States the percentage of mobile only users was about six percent.

But those figures represent 3G substitution, and will not fully reflect demand for LTE services that approach fixed network “wire speeds” in many rural markets.

We can be sure that people who stream lots of Netflix video will not be logical candidates. But that still leaves quite a lot of users for whom LTE might work. The key variables are of course typical monthly consumption and number of users on any single account.

Per person usage at the moment might range between two gigabytes a month up to about seven gigabytes a month. So a single-person account might plausibly find LTE a plausible alternative, especially at the lower ranges of usage.

But the wild card will be tariffs. If mobile operators figure out a way to offer a “fixed” alternative tariff, offering more bandwidth, but only usable within a local area, with some way to support mobile usage out of that area on a more-typical “mobile” tariff, demand could be quite substantial.

The key issues are retail packaging terms and conditions. If LTE mobile tariffs remain the “only” way to buy rural LTE, then the substitution market will be more constrained. 

But many of us would guess that will not be the case, over the longer term. Specific “fixed” services, offering usage caps and pricing more in line with fixed networks are likely. Those tariffs probably will not be identical to packages offered by fixed network operators.

They just have to be “close enough” to offer a viable commercial alternative.

Can Intel "Outside" Make a Breakthrough in Video Streaming?

If Intel can get the licensing agreements in place, and that is a tall order, consumers in some initial markets might be able to buy and stream discrete programming channels, and possibly single programs, to their TVs for the first time. That would make Intel's New IPTV service a potential game changer for the video subscription business.

The service will be provided by a new set-top box, possible Intel branded, that will feature a "cloud DVR" feature for better ease of use, as users will not have to program recording ahead of time. 

Intel Corp. has been developing an Internet-based television service that essentially would be a "virtual cable operator," presumably offering the same "bundled" approach to video entertainment as offered by cable, telco and satellite-TV operators. 

Whether Intel can convince programmers that now is the time to infuriate all the rest of their main distributors is the issue.

At stake are relationships, already testy, with cable, satellite and telco distributors who pay programmers $41 billion a year in licensing fees. Any significant deals with Intel for a streaming service would put huge pressure on those other existing relationships. 

Someday programmers will change their minds. But a rational person might argue that the time remains somewhere off in the distance. Ask yourself whether you would jeopardize a business worth billions to gain a new business of millions. 

But some argue Intel will succeed where Apple and Google have failed. We may know soon whether Intel will get a chance to try, at any rate.